Rural IT parks need more than just tax breaks, says analyst

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This is according to Jessica Mae Go, assistant manager for real estate management firm Jones Lang LaSalle, who noted that a recent resolution of the Philippine Economic Zone Authority (Peza) may not attain its objective of developing IT parks in the provinces if the government does not create a conducive ecosystem for investors. Peza, the government agency tasked with promoting investment and facilitating investments in various economic zones throughout the country, last month released Resolution No. 12-329 amending the incentives provided to developers of IT parks and facilities. ?Peza may have had good intentions in creating this resolution but, to truly encourage the development of IT parks and buildings outside Metro Manila and Cebu City, it will take more than just these incentives provided by the Peza,? Go noted. ?The private and the public sectors need to cooperate to improve the quantity and quality of the labor pool, and enhance the telecom and power infrastructure in provincial areas,? she said. Go said the publication of the resolution initially brought confusion as it was not clear how the resolution would affect developers, BPOs, and IT firms — the main occupants of IT parks and office buildings. The resolution mandated the removal of incentives for future IT office building projects not yet accredited by the Peza, which are located in the first four Peza-registered IT parks in Metro Manila: Eastwood City Cyberpark, Northgate Cyberzone, Robinsons Cyberpark and the E-square IT Park in Bonifacio Global City — with another, the Cebu IT Park in Cebu City, outside Metro Manila. All IT buildings — whether completed, under planning or construction — that were already registered with the Peza prior to the resolution are entitled to the incentives. Meanwhile, the resolution also granted the developers of future IT parks and buildings outside Metro Manila and Cebu City such fiscal incentives as a much discounted 5-percent tax on gross income instead of the normal 35-percent corporate tax. Go said BPO firms within IT parks and buildings are not affected by the resolution. According to Peza, the main purpose of the resolution is to encourage the development of new IT parks and buildings outside Metro Manila and the regional center of Cebu City. In general, developers are primarily encouraged to construct IT buildings where there is potential demand for space in such projects, with the demand coming mainly from BPO and IT firms, Go said. But she said BPO firms have their own criteria in determining a location for their operations. Among these major criteria include the availability of a qualified labor pool, reliable and redundant telecom and power infrastructure, and ample supply of real estate. The presence of a highly qualified labor pool is the top criterion, followed by the availability of a reliable, highly sophisticated and foolproof infrastructure network to transmit voice, and data in order to ensure a high level of service to their clients, she said. ]]>

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